November Construction Starts Down 11 Percent

At a seasonally adjusted annual rate of $417.6 billion, new construction starts in November dropped 11 percent from October’s elevated pace, according to McGraw-Hill Construction, a division of The McGraw-Hill Companies.

Nonresidential building retreated after being boosted in October by the start of a massive manufacturing plant, and nonbuilding construction showed electric utilities pulling back from the brisk pace of recent months. Meanwhile, residential building in November registered moderate growth, helped by further strengthening for multifamily housing. During the first 11 months of 2011, total construction on an unadjusted basis was reported at $390.5 billion, down 2 percent from the same period a year ago.

“The strong volume in October, with total construction starts climbing 12 percent, was not likely to be sustained given the fact that much of the lift came from the start of several unusually large projects,” said Robert A. Murray, vice president of economic affairs for McGraw-Hill Construction. “In November, activity returned close to its average pace so far in 2011, which is essentially the same as what was being reported during the previous two years. The picture for construction starts in a broad sense continues to be stability at a low level, with renewed expansion not yet taking hold. By individual project types, however, there has been a varied pattern during 2011. Year-to-date gains have been reported for multifamily housing, manufacturing plants, electric power plants, and even some commercial building types, but this has been offset by further weakening for single family housing, institutional building, and public works.”

NonresidentialNonresidential building in November fell 20 percent to $142.4 billion (annual rate), following its 36 percent surge in the previous month. The largest decline was reported for the manufacturing plant category.

For commercial building, office construction in November retreated 26 percent from October. Stores and warehouses weakened in November, with respective declines of 9 percent and 16 percent, while hotel construction was flat. The institutional categories showed mixed behavior in November. Healthcare facilities jumped 41 percent; the educational building category, down just 1 percent, was essentially steady in November; and the smaller institutional categories in November reported decreased activity, with churches, down 27 percent; transportation terminals, down 31 percent; recreation-related projects, down 33 percent; and public buildings, down 38 percent.

NonbuildingNonbuilding construction, at $137.0 billion (annual rate) in November, dropped 14 percent from the previous month. The electric utility category retreated 34 percent from its exceptional October amount, although the pace in November was still quite high by recent standards – 34 percent above the average monthly rate during 2010.

For the public works categories, steep declines in November were reported for water supply systems, down 25 percent; and sewers, down 43 percent, while river/harbor development managed to rise 24 percent from a lackluster October.

Highway construction in November slipped 4 percent, although bridge construction climbed 29 percent. The “miscellaneous” public works category, which includes such diverse project types as site work, mass transit, pipelines and outdoor sports stadiums, grew 11 percent in November.

ResidentialResidential building in November advanced 4 percent to $138.2 billion (annual rate). Like recent months, multifamily housing provided the upward momentum, rising 25 percent. Single-family housing in November retreated 1 percent, settling back after the modest improvement of the previous month, as this category continues to struggle to achieve any upward traction.

The top five metropolitan areas in terms of the dollar amount of multifamily starts were – New York, up 26 percent; Washington, D.C., up 56 percent; Boston, up 35 percent; Dallas-Ft. Worth, up 140 percent; and Chicago, up 20 percent. The large percentage increase for multifamily housing in the West was helped by gains in such metropolitan areas as Seattle, up 139 percent; Los Angeles, up 61 percent; and San Francisco, up 41 percent.